Brokers' take

Published Tue, Nov 13, 2018 · 09:50 PM

ST Engineering | Buy Target price: S$3.97 Nov 13 closing: S$3.46 RHB Research Institute, Nov 13

We expect ST Engineering - scheduled to announce its Q3 2018 results on Nov 14, to report Patmi of S$140 million, up 13 per cent year-on-year. This growth will largely be aided by the improvement in profits from Aerospace and Land Systems. We still expect the company to see a gradual revival in earnings growth, aided by increased MRO (maintenance, repair and overhaul) activity, P2F (passenger to freighter) conversions, likely contributions from its recently-acquired MRAS (Middle River Aircraft Systems), delivery of smart city-related contracts in and outside Singapore, and defence-related contracts.

Its orderbook, now at a peak of S$13.4 billion, offers revenue visibility of two years. We believe the market has not yet fully priced in the potential earnings growth from the MRAS acquisition.